9/26/11

The market went up for the second day in a row.  For some reason, this action causes bulls to rush out of whatever pens they've been held in and dance around bearish blogs calling for new highs.

Yes, there have been breaches of trend lines, but if this is a second wave (in this case, Minute [ii] of 3) rather than a fourth wave, that is to be expected!  Not to mention we still had that gap to fill at 1166.76, which we are just a couple points away from closing.  On a linear scale, the 0.5 retracement of the wave down is at 1167.30.  If that breaks, we are looking at just shy of 1180 as the .618 retracement.

One challenge is figuring out from all the overlapping slop which part of the wave we're in.  One-minute MACD seems to support a consideration of wave (b) as happening this morning, and the subsequent action was wave (c) of which we are closed in Submin iii.  A back-test of the center red line, followed by one last wave up to finally fill the gap would not be out of the question and would fit with this wave count.  (Most of this could also happen in the futures, though...)

The critical thing to remember is that on the 30-minute and 60-minute charts, we still have yet to record a lower low than 1114 on higher RSI, and on the daily chart, we still have yet to record a lower low than the 1101 August 9 low on higher RSI.  If Pebblewriter's "2007 is 2011" is still valid, mid-March 2008, which was the Intermediate (1) of P[1/A/W] bottom, corresponds with early or mid-October 2011 if I'm not mistaken.

Notice also that the rally from 1114 has been obeying a channel line.  This afternoon's rally was simply a thrust to near its top.  It is worth pointing out that the top of the channel line intersects the upper pseudo-trend line tomorrow at the close....